The Reading Room

More Providers List Costs as Model Shifts

As out-of-pocket health care costs soar, hospitals and insurers are building websites to help consumers "shop" for the lowest priced care, the Detroit Free Press reports.

Three Michigan hospital systems--Detroit-based Henry Ford Health System, Oakwood Healthcare in Dearborn and Spectrum Health in Grand Rapids--post average prices for common tests and procedures online. Insurers also are ramping up sites to include the costs of procedures, with some even providing consumers detailed information on local prices by ZIP code.

Nearly 2,000 individuals every day visit Ford's site, which represents a "fundamental shift" in how health care prices are set and published, according to the hospital's chief revenue officer. As more pricing information is publicized, the traditional hospital pricing model--which was based on the ideal charges hospitals wanted to collect from patients--is morphing into a model that highlights the average costs insurers typically pay and physician fees, according to the Free Press.

According to the director of sales strategy at Blue Cross Blue Shield of Michigan, price transparency will help eliminate cost variance among providers because every organization will want their prices to align with rates. "If your prices are out of whack, everyone will know it," the vice president of finance for Spectrum Health says.

The CEO of Medical Network One, a New York-based physician management service, says she expects consumers soon will be able to obtain pricing information from a touch-screen kiosk in a hospital lobby. She also predicts that concierge-type physicians' practices that charge a monthly or yearly fee to patients for packages of services also will gain ground because consumers will request price information as the country moves toward a more organized system of care under the federal health reform law (Anstett, Free Press, 3/4).

While it is helpful for patients to know the overall cost of their exam, it is critical, first and foremost, that hospitals are able to provide patients with accurate information on their actual out-of-pocket costs. It is particularly important for hospitals to provide this information in environments where patients are facing significant pressure from insurers to utilize lower cost providers.